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tvm 5 day hogan - Lecture Problem Solutions Time Value of...

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Unformatted text preview: Lecture Problem Solutions Time Value of Money Day 5 I. ] Scream Ice Cream Company is analyzing several of its upcoming flavors. What is the value of peanut chocolate crunch if the discount rate is 6.2 percent and the flavor is expected to generate fixed cash flows forever with the first cash flow of $100,000 in 4 years? 1" A. ‘rifi‘r gang; “5L; ‘FlI-J‘ a. .n '{I'G-Uflr fla'r rflr ll. ac. lam-a m: Imus-l- use TL: "cranky (gawk. TL“. 1031* CF 1‘: 3. rue! ‘lf ;. flu {Para-lulu fall-5 u: '1“: til.“— 3‘: flat refrih‘lfl 14 far 3'_ Ll: 'l'l—II-I~ liken-J? TL'vt “like. he year? 1-- C: ?'a 1 organs 21'» —_———_ H ———__—-——' R: i 1'" (”HP (”in 06.2211 [amnion «- ___._—-I- 0.961 =l‘clzag53snczl 2. What is the value of nougat swirl if the cost of capital is '12 percent and the flavor is expected to generate cash flows forever with the first cash flow of $90,000 in 5 years and all subsequent cash flows growing annual] by 1.5 percent? 1's q“ /; 'Sl'ug gallk 1C4...” JM gf'suif' qt “HI-t {Inn-u. 4 rel-II .u. Lem.) “h uh. Til-a... tin-Ila} ("f‘hh'f 6- (.ramln_ (slid-n flaw. ‘Fifi'f flil‘ aid 4* (’5, THAI-null. Hli B! m 1»).th all? f." “l. Ll; ”3 "97' Thu Jlicm-ud‘ rlu+ at“ “(l-‘1 Wu t-o_ " ‘félll‘lolzzc [5433111 .31 (Itcho‘rfiyl ‘lo,oao 0-011-0-“5 = *I‘S‘iifi‘ll res 3. I Scream Ice Cream Company is analyzing several of its upcoming flavors. What is the value of coffee toffee if the Opportunity cost of capital is 3.0 percent and the flavor is expected to generate fixed cash flows of $250,000 with the first cash flow in 6 years and the last cash flow in 4' '____.---? U- 1 $ 3! d; Eat-II- fdi'iI-ltt. curl- ‘Pl.a‘ flun- lflw. ’0 an Alf-“f M at Lu". .a aufluiffi ‘t SAIL»; gm" w fills at 144-!- UlllH-i. ‘1' t" S (Uiifla END '4'). l-ie 145-!“ 14..., fu ‘1- 1-in- 5 «J chick-f :+ +- flame «in .t f-O. u MT F“ rm. kl I in) WT Eu m). :3 £0 1'? 250m 0 END S" 3-0 7 O (56521.13 -" W = 15:; 53121 . '1'-?E‘ FU- $106 great 72? 4. What is the expected annual cash flow generated by peanut butter passion if the project has a cost of capital of5%, is currently valued at $1.3 Million and is expected to pay 10 equal annual cash flows with the first cash flow 4 years from today? +$ Egg-1. P.’ I. I. 'l 1‘. Qinl fin-n... l‘Yflfif a; fLi. «nay! (,3: HM‘H’ L‘s-Hf“.- Ifllku. ‘+ 1'”: 3 lid-Hit qr {we‘ve ‘H'H- ‘Fiflf ffiffl‘a- Shau- ‘ucu 2” 1" 1‘0] use cat... use F's W=l.%fl r: we. 1" a 1- G: Wa- {-3 +11"... 1L. want Id I: W 'r'HT w m... IQ 1: W ?HT Fv mi: ‘3 sedate0W ‘5 - - 1 49:51.1on e}?— *2108'5325 W ...
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